2019 (9) TMI 42 - AT - Income Tax

Appeal Dismissed for Loss Deduction, Reevaluation Directed for Expenses Outside India

Standard Chartered Grindlays Pty Ltd [Formerly known as Standard Chartered Grindlays Bank Ltd Versus The D.D.I.T International Taxation New Delhi

Standard Chartered Grindlays Pty Ltd [Formerly known as Standard Chartered Grindlays Bank Ltd Versus The D.D.I.T International Taxation New Delhi - TMI Issues:1. Disallowance of deduction for loss/expenditure/outgo from bank coffers2. Addition of claim of expenses incurred outside IndiaIssue 1 - Disallowance of deduction for loss/expenditure/outgo from bank coffers:The appellant contested the disallowance of a deduction of &8377; 5,06,54,54,878, representing a loss incurred from a settlement with National Housing Bank (NHB) and the addition of &8377; 11,95,79,687 for expenses incurred outside India. The appellant received account payee cheques from NHB, which were later disputed due to the Securities Scam. Despite depositing the disputed amount with NHB, subsequent legal proceedings led to conflicting judgments. The Assessing Officer disallowed the loss claim, stating no business transactions with NHB existed, and the amount was credited to another party's account. The CIT(A) upheld the disallowance. The appellant argued the loss crystallized due to a settlement ratified by the Supreme Court. However, the Tribunal found the transaction unusual and not part of regular business, denying the deduction based on legal precedents and the Income Tax Act.Issue 2 - Addition of claim of expenses incurred outside India:The appellant's claim for &8377; 11.95 crores in expenses incurred outside India was denied by the Assessing Officer and confirmed by the CIT(A) due to the absence of the claim in the income tax return. The appellant argued the expenses were related to technology updates post-takeover by Standard Chartered Bank and should be allowed. The Tribunal noted that the claim was not examined with supporting certificates and directed the Assessing Officer to reevaluate the claim with proper evidence, emphasizing fair play and justice. The appeal was partly allowed for statistical purposes.In conclusion, the Tribunal dismissed the appeal regarding the disallowed loss deduction, emphasizing the irregular nature of the transaction. For the expenses incurred outside India, the Tribunal directed a reevaluation with proper documentation, prioritizing fairness in decision-making.